China tightens oversight of CMOs to curb counterfeiting

China has boosted its supervision of contract manufacturing organisations doing work for overseas companies in a bid to prevent the export of counterfeit medicines.

From July 22, a number of new regulatory measures drawn up by the State Food and Drug Administration (SFDA) apply on cross-border manufacturing contracts, according to lawfirm Sidley Austin LLP, which has a division specialising in the healthcare and life science sectors.

There have been cases in which contract manufacturers have been suspected of exploiting the relationship with a brand owner, including its intellectual property and technical expertise, to serve the counterfeit drugs market.

Once transferred to a CMO, specifications and other technical information can be used to make unauthorised product at an authorised contractor - the so-called 'third shift' - or another company in league with the CMO. The result is a counterfeit which is hard even for the brand owner to distinguish from genuine product.

Among the new measures is a requirement for Chinese CMOs to enter into contracts with the foreign brand owner directly, rather than an agent. The CMO must also be identified on the labels or pack inserts of the finished products, and the products should not "bear any SFDA-issued pharmaceutical approval numbers, imported drug registration numbers or filing numbers for contract manufacturing," according to Sidley Austin.

CMOs can also no longer supply unpackaged goods - each product must have an inner package with labels displaying the names and addresses of the contractors, unless the Chinese firm is a member of a multinational group. Even in the latter case supporting documents issued by overseas regulatory agencies must be supplied to the SFDA.

Finally, the new measures include a commitment for the SFDA and its provincial counterparts to improve the supervision of cross-border contract manufacturing.